Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Risk markets re-engaged the buy levers again with the release of the latest FOMC minutes providing a catalyst for further advances, Wall Street lifting nearly 2% while other risk assets like the Australian dollar and oil rose in kind with industrial metals mixed. Treasury yields fell back to historic lows again while the USD lost ground against everything but Pound Sterling.

Looking at share markets from yesterday’s session where in mainland China, the Shanghai Composite fell 0.5% to 2882 points, with the Hang Seng Index down in sympathy if not magnitude, falling 0.1% to be at 24361 points, unable to re-engage on its previous breakout. The daily price chart still shows a consolidation pattern with no new breakouts as yet, although momentum remains on the positive side with futures suggesting another go this morning:

Japanese share markets were able to advance again, having broken free at the start of the week with the Nikkei 225 lifting 0.7% to 20595 points. This takes it past the previous gap down level from the February/March lows with futures looking positive here too as momentum becomes overbought, so expect another new daily high here:

The ASX200 was able to recover from a gap down of nearly 1% to finish over 0.2% higher at 5573 points. SPI futures are up nearly 0.6% in response to the rise on Wall Street overnight, so this breakout could finally be confirmed here as all the short positions are wiped out, ready for a run up to 6000 points:

European markets were able to look past the stronger Euro again with another solid run across the board with the German DAX up 1.3% to 11223 points. Sentiment is morphing into exuberant here with yet another market poised to breakout and get going once it pushes aside the once strong overhead resistance:

Wall Street is still poised here to breakout and wants to do so with full support from the Fed as the S&P500 finished 1.7% higher to 2971 points. Its all engines ahead up to the 3000 point level if we get a solid daily close above resistance at the 2970 point level:

Onto currency markets where the volatility returned to selling USD across the board with the previously overbought Euro re-engaging for another leg higher, pushing up towards the 1.10 handle. I was looking for a pullback here yesterday, but with no price action near the low moving average, no short positions are anywhere to be seen yet:

The USDJPY pair fell back amid the weak USD narrative, but only slightly, getting back to its Monday morning starting point before recovering a little late in the session to be at the mid 107’s this morning. Momentum remains positive on the four hourly chart with the potential for a return above the previous session highs:

The Australian dollar was a benefactor of the weak USD with a breakout above the weekly highs at the 65.60 level also putting paid to any short selling in the short/medium term. A break above the 66 handle is now on the cards with momentum still overbought but not overly so:

Oil prices caught back up to the risk taking with both markers up over 3% with Brent crude pushing back up towards the $36USD per barrel level as it again comes up to its post-breakdown level.  I still contend we are near the end of this move but wouldn’t be surprised at another lurching, overbought and overdone blowout that could even hit the $40 level before all the longs are exhausted:

And, finally to gold, which continues to slowly melt higher after its recent breakout to a new yearly high, edging up to the $1747USD per ounce level overnight.  I’m still watching for a bigger breakout above the high moving average high on the daily chart as the target for this breakout is still the 2011 highs at $1825 or so:

Glossary of Acronyms and Technical Analysis Terms:

ATR: Average True Range – measures the degree of price volatility averaged over a time period

ATR Support/Resistance: a ratcheting mechanism that follows price below/above a trend, that if breached shows above average volatility

CCI:  Commodity Channel Index: a momentum reading that calculates current price away from the statistical mean or “typical” price to indicate overbought (far above the mean) or oversold (far below the mean)

Low/High Moving Average: rolling mean of prices in this case, the low and high for the day/hour which creates a band around the actual price movement

FOMC: Federal Open Market Committee, monthly meeting of Federal Reserve regarding monetary policy (setting interest rates)

BOJ/Abenomics: Bank of Japan, economic policy/direction enacted by PM Shinzo Abe

DOE: US Department of Energy  Uncle Point: or stop loss point, a level at which you’ve clearly been wrong on your position, so cry uncle and get out!

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